Where do we go from here?
When the construction boom is over, what’s next for Reno? It may be a bunch of little things.
Reno’s economy rears its booming head every morning at the corner convenience store, just as the sun tips over the Pah Rah Ranch and shines on the freshly scraped earth in Spanish Springs, Damonte Ranch, West Reno, North Valleys and Cold Springs.
Carrying doughnuts, packaged sandwiches, coffee, a 12-pack of suds on Friday afternoon and a Red Bull and vitamin pack on Monday morning, the workers trudge back to vehicles laden with tools and materials. Some have the fancy rigs with the pipe racks, a magnetic company sign and KKOH pre-set on the radio. Others, like the nearby mid-'90s Japanese car with a ladder strapped to the roof, have the rat-a-tat-tat of Radio Tricolor blasting through the stereo.
This is the human face of a construction industry that—like a shot of nitrous—has revved up the Truckee Meadows’ economic engine.
This region has a history of dependence on “one big thing” to fuel its economy. The “Tough Little Town on the Truckee” described by historian John M. Townley would set its early economy on merchandising and transportation as the Comstock Lode boomed, then settle into an agrarian economy based on the wonders of alfalfa hay and the ability to divert water. In the 20th century, we cashed in on the moral turpitudes of divorce and gambling. But the dice and cards no longer make us unique, so we’ve struggled to re-invent our tourism economy, ever on the lookout for the “next big thing.”
For the past 10 years, we’ve pinned our hopes on warehousing, logistics and the faint glimmer that high-technologists would find our quality of life, favorable tax structure and less onerous regulations enticement enough to move over the hill—just as the California miners rushed to Washoe in 1859 when they heard about the strikes at Gold Canyon, Ophir and Silver City.
What the next big strike will be is anyone’s guess, and it may not come from where we think. It is as likely to come from the crowded halls at Reed High School as it is from a press conference staged by our economic developers. It may be hatching within a sterile lab in the catacombs of the University of Nevada, Reno. Or, it may be that there is no “next big thing” at all.
Riders on the Storm
Mike Lynch, executive director of the Northern Nevada Builders Association, calls it the perfect storm—high land valuations and increased demand from an influx of new folks catalyzed by low interest rates. He also notes that our planning process—the government approval pipeline that turns land into houses—has soured many land developers, who are just sitting and waiting, which shrinks supplies and drives up costs. That’s why, he contends, tract homes cost as much as $300,000.
“We’ve seen prices in the last three years almost double,” Lynch said. “This is actually hurting us because the snowbirds and empty-nesters, who are a lot of our buyers, may go to Boise or Logan, Utah, instead.”
Reno’s next big thing may be just another version of today’s construction economy. It may be Baby Boomers coming off their first career and looking to start a new one. Lynch believes we will see more of the so-called active-adult communities: an all-in-one village with recreation, restaurant, shopping and entertainment connected with trails and surrounded by walls. In West Reno at the Somersett master-planned community, Del Webb—the king builder of such enclaves—is developing Sierra Canyon, complete with fitness and activity center, hiking trails and bike paths. A one-bedroom unit starts at $265,000.
Del Webb recently surveyed about 1,700 of these Boomers, which is defined as folks born between 1946 and 1964. One in three said they would move out of their homes when the kids leave, and one in four said they would prefer an “age-qualified” community. Nearly 70 percent said that when junior leaves, disposable income would jump dramatically.
“Reno is such a great area for the active senior market,” Lynch said. “We have the recreation resources. … What community wouldn’t kill to be so close to Lake Tahoe? We have a good highway system. We have the four seasons that make it great to visit grandparents in the summer or winter. We just have a great place to live.”
But the construction economy may already be on overload. It takes upwards of a year to get your new digs once you sign on the dotted line, and high prices have made Dayton, Fernley and Cold Springs the only viable alternatives for many new-home buyers. Materials and workforce issues also cloud the crystal ball.
“Four years ago I had eight guys working for me. Now I have 19,” said Lenny Gilmore, co-owner of ABC Builders, which specializes in interior finish work for the big tract builders. “I could use three more guys, but anyone worth a crap has a job already.”
Construction materials also are getting hard to come by, Gilmore said. The global economy and China’s sudden rush to capitalism have placed a premium on anything made with metal—and that’s only if you can get it.
“I’ve bought every finish nail in town just to make sure I have them,” Gilmore said. While business is brisk, profit margins are tight, and costs can be high.
Construction jobs in Washoe County have grown 48 percent since January 2000, according to statistics. Today 18,700 jobs are in the construction category. Thousands of others are linked to the industry.
“It is very competitive to get a workforce,” Lynch said. “These are top-dollar jobs with full benefits. These are the people buying cars and new houses, supporting their church and the community.”
Building the Better Work Force
When discussing the Truckee Meadows workforce, the conversation will eventually wind its way to our education system and its ability or inability to prepare our sons and daughters for the “real world.” The construction industry’s struggle to find people “worth a crap” was the impetus for creating the Academy for Career Education, or ACE. It is one of Washoe County’s eight charter schools, which are funded with taxpayer dollars, though each is run by its own governing body that directs operations.
“The local education system does have an advanced-building-trades program, but the way it was structured, it really didn’t attract the quality kids,” said Leigh Berdrow, vice principal at ACE. “Access became the real issue. Students couldn’t really attend the trade classes and then get back and meet the requirements at the traditional school.”
Working with an advisory committee comprised of construction industry professionals, ACE centered its construction curriculum on actually building a home. In 1987, it was the construction industry that helped push the charter school legislation in Carson City with this sort of school in mind. Construction company owners had become frustrated with a school system that seemed to place more emphasis on the baccalaureate track, eschewing a curriculum path that would help prepare for the construction trades, where wages can easily top $20 an hour
“We have integrated the academics with the construction side,” Berdrow said. “Teachers from all the disciplines meet regularly to see how we incorporate construction into the classroom and visa versa.”
Students also benefit from small classroom sizes—average student ratio 20-1—a more-intense quarters system and instant access to apprenticeship and bachelor’s-degree programs in construction engineering. Maybe more important, they have direct connections to the construction employment network.
The owners of Lucky Concrete approached ACE looking for an apprentice estimator; four students applied, and James Cunningham earned the spot.
“I got a chance to experience everything about construction at ACE,” Cunningham said. “The traditional trades program, they had so many students, and you couldn’t really focus on construction.”
Integrating the needs of business with school curriculum is nothing new, said Debbie Cylke, superintendent of secondary education at the Washoe County School District.
“Each fall, we survey businesses leaders to look at trends and potential jobs in the future: Where are the hot markets? What will be their needs?” Cylke said. “They told us aging Baby Boomers will place a greater need for employees in the health-related professions, technology will always be a basic staple, and fashion and cosmetology look strong because of the growth of the entertainment industry,”
Manufacturing is the “hidden jewel” of the Northern Nevada economy, said Bob Blank, operations manager for the Management Assistance Program (MAPS) of Nevada, which is an extension program of the University and Community College system. MAPS is a coaching service that helps manufacturing companies become leaner, stronger, faster—and more profitable.
“There is pressure on the worker because technology changes so quickly,” Blank said. “Productivity increases because more work is being done by fewer people. Charlie the machine operator becomes automated, and if he isn’t tech savvy, he’s in trouble. Education really never ends.”
This human-resource side of the economic equation is why our state Legislature goes overtime, and education is usually the first issue on the candidate’s brochure. Ordinarily it comes down to one side saying we don’t spend enough money and the other side saying we spend too much and get too little.
Touched by an Angel
Economic competitiveness requires capital. Or, as Randy Newman sings, it’s money that matters.
Those with the capital look for situations where they can get the best return on their money. This is why Nevada has always been on the capitalists’ short list because of its favorable tax structure, softer regulatory schemes, cheaper labor and less onerous insurance costs. What better state to roll the dice?
The new money man in Northern Nevada is Bob Goff, who, with a gaggle of Silicon Valley expatriates, formed the Sierra Angels, a venture-capital group based in Incline Village. So far, they have helped 47 companies with money and expertise. They have co-sponsored the annual Gold and Silver Venture Capitalist Conference—the fourth annual is scheduled for this October—for regional dreamers who collectively pitch for some $20 billion in capital.
The Sierra Angels ascended from the social network of Silicon Valley engineers who essentially cashed in and moved to where the skies were blue and the tax man seldom seen.
Two of their latest assists are Vector CoGen, an alternative-energy company, and Itronics, which converts photo-processing waste into a New Age fertilizer for golf courses and vineyards.
The 50-member Angels are the link that converts the science and technology into commercial ventures, a process known as technology transfer.
“We want to take specific research projects and prioritize which will have the greatest commercial benefit and proactively establish these companies,” Goff said.
It will have two benefits, he said: increase the tech economy and bring additional revenue to the community as a job creator. The Center for Entrepreneurship and Technology is an economic platform shared with the Desert Research Institute and the University of Nevada system.
“The government spends tons of money each year on research, and rightfully so,” he said. “However, it’s a system that doesn’t do a great job of converting it into a commercial enterprise.”
Goff is also excited about the new research partnership that’s being built in his own backyard, the Tahoe Center for Environmental Sciences, a $24 million research and teaching facility that will study alpine lakes and their watersheds. The 45,000-square-foot building will house offices and laboratories for the UC Davis Tahoe Environmental Research Center and the Desert Research Institute; exhibits and educational programs; offices, laboratories and classrooms for Sierra Nevada College students; and conference space for 150 people.
“We have an opportunity here to pull together environmental research and environmental policy along with the intellectual talent we have in Reno and the Sierra Nevada,” Goff said.
The Sierra Angels bring the grease—money—that makes the deal flow and brings new kinds of jobs, businesses and opportunities.
Reno used to be the capital of wild and wide open—anything you wanted, anytime you wanted it, 24/7.
Dave LaPlante is Reno’s 24/7 man, but in a whole new context. The worldwide virtual workspace has him conference-calling Belgium at 3 a.m. and Dublin at 5 a.m. before the guy from Atlanta takes charge of his conference room for a wired teleconference. As the president and CEO of Twelve Horses North America, he is thankful that Reno can still cough up a decent meal at 4 a.m.
Twelve Horses is part of the next generation of high-tech—they don’t make the chip or invent the next new widget, they take the existing technology tools and apply them to the business world. In this case, communicating across platforms—e-mail, fax, text messaging and World Wide Web. LaPlante calls this lifecycle communication. Something as ubiquitous as getting someone to pay a bill can seem sci-fi cool. Twelve Horses eliminates humans from the process.
LaPlante cowboys up in the high-tech world serving Fortune 500 companies from around the world. Sometimes he even dresses the part, with silver-studded rodeo belt and pointy leather cowboy boots.
“I like it,” he says about the wardrobe. “It’s Reno. It also starts a conversation.” His corner office is buried deep in the maze of low-story buildings that spread through South Meadows, named after what used to be there.
The Reno conversation, says LaPlante, starts with: “Why the hell are you in Reno?” LaPlante will then dive into the quality-of-life, adventure-place, ski-in-the-morning, golf-in-the-afternoon, kayak-downtown rant that depresses many a Californian.
“That’s when I’ve got them,” he says.
LaPlante used to be in gambling.
“I was lucky enough to be there for the last hurrah of innovation, when they were getting into player-tracking systems and database manipulation,” he said. “Where we [Reno gambling] missed out is that we didn’t look at gaming as a database acquisition thing.”
He sees the proliferation of Indian gambling—managed by major casino corporations—as merely a lead generation program for “the mother ship in Vegas.”
Reno’s obvious strengths lie in its location. Not so obvious is the high-tech infrastructure including huge information pipelines of fiberoptics that rush by our front porch. In some places the infrastructure falls a little short, as hardly any of the hotel-casinos have wi-fi, wireless networks for business customers.
“It’s almost embarrassing when I have a client staying in town,” LaPlante said.
Paying attention to infrastructure will keep the Reno story viable, he said. The warehousing/logistics businesses that have found Reno’s location and friendly business climate appealing chew up a lot of land.
“What we have in 8,500 square feet of space equals the payroll contribution of a warehouse 20 times our size,” LaPlante said. “I’m not saying that’s good or bad economics, that’s just reality.”
The Little Big Thing
Arabidopsis. It is the lab rat of the plant world. It has a molecular structure that is well-suited for testing. Plus, you get results fast—faster than if you’re working with corn, alfalfa or any of the better-known crop and feed plants.
The next big thing for the Truckee Meadows may be very tiny. Particles and molecules that you can see only with an atomic microscope.
In between the football and basketball games, the University of Nevada, Reno, is making big strides in things that are tiny. Biotechnology research on plants and animals at the College of Agriculture as well as a contingent of biomedical researchers at the university’s medical school are rippling through the local economy. At the Desert Research Institute, big-name companies whose names, for now, can’t be published are using the research infrastructure in the world of nanotechnology, or more simply, molecular switches. The best example of these molecular switches may be the g-force sensors that trigger a car airbag to deploy.
John Cushman works in this tiny world. His team just received a $3.8 million National Science Foundation grant to study plant genes and stress. Stress from the lack of water. Stress from cold. Stress from heat. Just another day in the Great Basin Desert.
“Typically, these grants support 10 to as many as 15 other people,” Cushman said. “The university benefits because 45 percent of the grant goes to overhead. But the real benefit is long term. We are able to build and maintain a research core facility and the analytical expertise that goes with it.”
These core facilities attract private companies that need research and development but don’t have the capital to build their own labs. Suddenly a public-private partnership is born.
Cushman is also in the middle of a $3.6 million NSF grant to investigate stress on wine grapes, particularly stress caused by lack of water. It turns out that when you deprive wine grapes of water, other defense mechanisms are triggered, such as the molecules that guard against bud drop and die-back caused by spring freeze.
“It’s not like we are going to compete against California wineries,” Cushman said. “But making plants more water efficient in Nevada is very appropriate. We are in a situation where agriculture takes about 70 percent of our water, and with the growing metropolitan population there is an intense competition for water resources. If we can grow plants with less water, that would be a good thing.”
Another good thing is using less energy, or at least different sources of energy. Richard Bjur, director of technology transfer at the Desert Research Institute, believes there is great potential in the world of the unseen: nanotechnology. This work includes the development of new, lighter, stronger materials, the conversion from a fossil fuel to a hydrogen-based economy and the development of photovoltaic devices that can capture energy from the sun.
The current collaborations with the private sector are a harbinger of “great things” for the college and the community, Bjur said. But there is a price.
“All new research is driven in a large part [by funding], and that research funding enables us to buy all the latest technology and hire the right people to put this together,” Bjur said. “Being able to attract research dollars is not only important to the students but also for the state.”
The Next Big Thing?
The next big thing will probably be a bunch of little things, said Chuck Alvey, executive director of the Economic Development Authority of Western Nevada, whose mission is to make sure the ground is fertile for new business flowers to grow.
“It’s hard to get a big company to move,” Alvey said. “You want to get the little businesses started and give them what they need to grow and stay.”
Alvey said the business world doesn’t need to be told about Reno. Everything from the Whitewater Park to the UNR basketball team’s Sweet 16 appearance has raised awareness. Reno is on the map.
If the construction boom turns to bust, it may very well be due to limiting factors such as air, water and developable land. Transportation issues also loom large, as all roads in the Truckee Meadows lead to a gridlocked junction of I-80 and US 395. Most other plans for a north-south regional road have been mired in flood and wetland issues, as well as NIMBY politics—the fear of chafing a chosen few.
Attempts at regional planning to deal with these issues have fallen in such disarray and litigation that District Judge Jim Hardesty is the de facto Reno, Sparks and Washoe County planning director. The builders/construction lobby effectively stonewalled a suggested November ballot measure that would have asked the Legislature to amend the local land use laws in the Washoe County region to more effectively manage or limit growth within sustainable natural-resource constraints and insure adequate, fundable levels of service and infrastructure, such as schools, fire and police protection, roads, flooding, water supply and sewer. A blue-ribbon task force is being formed instead.
“I hope the mission of this task force is to point out to local officials that they need to get along,” said Susan Lynn, long-time citizen activist and ballot-measure instigator. “Essentially, we want to make sure we can afford the future.”
Reno, Sparks and the rest of Northern Nevada share in the same limiting factors as every other community: How and how much do we invest in our human resources—educating our children? How do we provide affordable housing? How do we transfer great ideas and research into viable businesses? How do we attract capital? How do we stay competitive? How do we grow yet not ruin what brought many of us here in the first place?
“I think the biggest limiting factor may be attitude," Alvey said. "If people see what we are doing and want this growth to stop, that could effectively kill the momentum. What’s frustrating is how the community separates business people, as if business people aren’t part of the community. We are just as interested in finding a balance as anyone else. … We all want to find a way to shape this community and make it work."